Uber

Is Arianna Huffington Worse for Uber Than Travis Kalanick?

Huffington has a number of accomplishments on her résumé—perhaps the greatest being her capacity for personal re-invention. But her latest attempt, as a tech mogul, is likely to be different from the ones that have preceded it.

“It’s a real crisis,” Arianna Huffington said late last year, in her characteristically lugubrious accent, from a stage within the Time Warner Center. Dressed in a jet-black floral embroidered ensemble, the co-founder of The Huffington Post was addressing the crowd at Business Insider’s annual Ignition conference. Henry Blodget, the site’s C.E.O. and global editor in chief, was interviewing Huffington about her latest rousing passion. After indefatigably growing her eponymous organization into one of the world’s largest news sites, and occasionally arming herself with up to four smartphones at a time, Huffington appeared to have found a new religion: disconnecting.

Months earlier, Huffington had left behind the relentless pace of the HuffPost to focus exclusively on growing her new start-up, Thrive Global, a company dedicated to combatting burnout and, according to an investment pitch deck presentation, changing “how we work and live.” A few months in, Huffington sounded genuinely titillated by the financial opportunities awaiting her in the decompression market. She cited a RAND Corporation study estimating that “sleep deprivation” was costing the United States $411 billion annually. A Gallup study, she said, put the annual cost of “disengagement” and “absenteeism” at $500 billion annually. Thrive Global, she said, was a response “to the global epidemic of stress and burnout.” Thrive capped its Series A fundraising round with $7 million in investment at a valuation of $33 million.

Thrive, the business, was born from Huffington’s 2014 best-seller of the same name—Thrive: The Third Metric to Redefining Success and Creating a Life of Well-Being, Wisdom and Wonder. Upon publication, the book was derided in some circles as coalescing around the relatively simplistic credo, as one reviewer put it in Bloomberg Businessweek, that “you can have as much as you want, in whatever form that may be, as long as you get some sleep.” (Others were less kind.)

Video: The World of Uber with Travis Kalanick

Nevertheless, Huffington appeared to be honing her focus on a next act. After A.O.L. purchased The Huffington Post for $315 million, in 2013, Huffington earned a windfall of some $21 million. The sale culminated an extraordinary journey for Huffington, who had co-founded the site as a left-wing antidote to the Drudge Report shortly after George W. Bush’s re-election, in 2005. (The true origins of the site, however, remain murky. In 2014, Huffington settled a three-year-old lawsuit brought against her by Peter Daou and James Boyce for around $10 million.) But, as I’ve previously reported, Huffington’s successes were not especially appreciated inside the halls of her new corporate overlord. She was eventually sidelined at A.O.L. partly on account of her propensity for expensive hires, costly bets, and a singular management style. In 2015, a year after Thrive’s publication, A.O.L. was sold to Verizon for $4.4 billion, and Huffington appeared to be approaching the way out. She left Verizon last August 2016 to devote herself full-time to Thrive Global. Huffington has said that she realized she could not do both and be happy.

When she began the HuffPost, Huffington compensated for her lack of experience in both journalism and the Internet with a unique and protean talent for marketing. And despite her relative newness to the sleeping business, she has attacked the industry with similar vigor. A few months after her performance at Ignition, Huffington gave an interview to Blodget’s Business Insider touting her success. “We’ve already doubled our revenue targets for 2017 from what we had initially presented to the board,” she said. “Another indication of growing much faster than we thought is that we moved into our offices in September, and we already had to take additional space in our building and are looking to move to a new space three times as large.” She also opened a Thrive store in a big space in SoHo.

Huffington, indeed, has a bunch of astonishing accomplishments on her résumé, but perhaps the greatest is expertise in her own personal re-invention. Most recently, this has taken the form of her public advocacy for the rehabilitation of Uber, the scandal-plagued ride-sharing giant; and, to some extent, defender of women in Silicon Valley. This latest move is, in many ways, a case of classic Huffington re-invention. She’s not a technologist. She has no roots in northern California; but she knows how to be in the right place at the right time. The question, however, is whether this re-invention will work out as seamlessly as the preceding ones.

Huffington, who joined the Uber board in April 2016, likes to tell the story of how she fell in love with the company in the first place. Her former sister-in-law, Terry Huffington Dittman, was panicking one winter day because her daughter, Lindsay, was stuck in—horrors—Brooklyn, during a major snowstorm. Dittman called any number of traditional New York City car services to try to rescue Lindsay. None would do it. (There is no mention in this story of Lindsay hopping on the subway.) Out of ideas, Dittman then called Huffington, who hailed an Uber. “Tell Lindsay to look outside her window—there will be a car waiting for her in five minutes,” Huffington told her former sister-in-law. When Huffington, who is of Greek descent, first told this story at an Uber staff meeting in the fall of 2015, the audience roared its approval. “For the first time in my life,” she told them, “I felt like a genuine Greek goddess.”

Huffington’s new role only began to fully emerge after Susan Fowler, a former Uber engineer, wrote a blog post, in February, that revealed the shocking behavior of her male supervisor, including allegations of his sexual harassment of her over Uber’s chat system. “It was clear that he was trying to get me to have sex with him,” Fowler wrote, “and it was so clearly out of line that I immediately took screenshots of these chat messages and reported him to HR.” The situation quickly devolved, with the human-resources executives allegedly not taking her claims seriously. Fowler left Uber in December 2016, after 13 months on the job.

By that point, Huffington was the only woman on the eight-member board of directors that included such investing heavyweights as Bill Gurley, a partner at Benchmark Capital, the renowned venture capital firm; David Bonderman, co-founder of TPG, the massive buyout concern; and Yasir al-Rumayyan, the managing director of Saudi Arabian sovereign wealth fund that invested $3.5 billion in Uber in 2016. Huffington was, in many ways, perfect for the job; she had overseen a competitive work environment, much like Uber, and was now preaching a seemingly enlightened gospel about productivity. But she was also in something of an ethical pickle. At the time, after all, she was still editor-in-chief of the Huffington Post. “Who wants to be covering Uber while your editor in chief is sitting on the company’s board?” wrote Erik Wemple, the media columnist for The Washington Post, at the time. “If you genuinely, authentically, truthfully, with your entire body, feel that Uber has done something very good, you write it up at your own peril. Because everyone will think you’re trying to please the boss. On the other hand, consider writing something negative, and then encountering Huffington herself in the canteen. How will that go?”

Huffington appeared to have the ability to overlook the consequences of putting her reporters into such awkward situations. As I have previously reported, Huffington often put loyalty to her friends, such as the Dalai Lama, and Fareed Zakaria, before her loyalty to the Huffington Post’s journalists. It became a problem with Kalanick, too. A former editor told me last year that Huffington Post reporters followed an unwritten policy of not publishing Kalanick’s tweets, which were often newsworthy and provocative. “That was the level of obsession with some of these friends of Arianna,” the former editor said. “Everyone was terrified and lived in fear.” (In response, Huffington maintained that she never intervened to stop any Uber story—she sent along links to 11 pieces that ran—and said, “I have to confess (sorry Travis) that I do not even follow him on Twitter.” Huffington declined to be interviewed for this piece.)

But Fowler’s revelations, which occurred after Huffington’s departure from The Huffington Post, represented an ethical failure of a far greater magnitude. Uber, of course, was now worth nearly $70 billion, one of the most valuable private companies on the planet. A lot of wealthy investors had a lot riding on its continued success. Somehow Huffington, who was running a company that sold iPhone charging beds for $100, seemed to sense the moment was ripe for her to once again reinvent herself—this time as the head of a culture change at the company. A day after Fowler’s blog post, Kalanick announced to Uber employees that Huffington, working together with Eric Holder, the former U.S. Attorney General who had since returned to Covington & Burling, along with Liane Hornsey, the head of HR, and Angela Padilla, Uber’s associate general counsel, would lead an investigation into Fowler’s allegations, along with other issues of diversity and inclusion at Uber “more broadly.” Added Kalanick, “Arianna is flying out to join me and Liane at our all hands meeting tomorrow to discuss what’s happened and next steps. Arianna and Liane will also be doing smaller group and one-on-one listening sessions to get your feedback directly.” Huffington tweeted that she had “just talked w/ Travis” and would be part of the “full independent” investigation team.

After the “all-hands” meeting, Huffington reported in a blog post on Uber’s site, “Travis spoke very honestly about the mistakes he’s made—and about how he wants to take the events of the last 48 hours to build a better Uber.” She wrote that she believed it was her responsibility to “hold the leadership team’s feet to the fire on this issue. Change doesn’t usually happen without a catalyst.”

In March, Huffington held a conference call with reporters. “Going forward,” she said, “there can be no room at Uber for brilliant jerks.” No male Uber executives were on the call, although a number of woman executives were. “It’s not like we got them from central casting,” she said. She said she had spoken with hundreds of women employees at Uber and told CNN, “Yes, there were some bad apples, unquestionably. But this is not a systemic problem. What is important is that the structures that were not in place are now being put in place to make sure that women, minorities, everyone, feels completely comfortable at Uber.” She insisted that Kalanick was not leaving his position as Uber C.E.O.

Last month, however, things spiraled further out of control at Uber. A report by another law firm, Perkins Coie, released on June 6, found that there were 215 incidents at Uber of sexual harassment, bullying, retaliation, and bias. Forty-seven of the claims were about sexual harassment. Twenty employees were fired as a result. Another 31 employees were “in training” and seven employees were issued “final warnings.” According to Uber, 57 of the claims remained “under review” and 100 of them were essentially dismissed. In an interview with CNBC on June 7, Huffington said it was her responsibility “as the only woman board member” at Uber to reduce claims of sexual harassment to “zero.” She was asked about her previous comment that Uber’s problems were not systemic. “I never said there wasn’t a systemic cultural problem, I was talking specifically about sexual harassment,” Huffington said. “It all depends on your definition of systemic.”

On June 13, Uber released Holder’s 13-pages of recommendations about how to fix the company’s culture. There were no surprises, but rather the sorts of things that smart companies often already do, including using performance reviews to hold senior executives accountable and appointing an independent chairman of the board of directors. What was a bit of a surprise, however, was that Kalanick announced that he would take a leave of absence from Uber, following the tragic death a few weeks earlier of his mother in a boating accident, which also badly injured his father. He also said he needed to “reflect,” to “work on myself,” and to continue to build out a world-class leadership team. “For Uber 2.0 to succeed,” he wrote, “there is nothing more important than dedicating my time to building out the leadership team. But if we are going to work on Uber 2.0, I also need to work on Travis 2.0 to become the leader that this company needs and that you deserve.”

At the “all-hands” meeting at Uber that day, Huffington was once again in the spotlight: on stage in front of around 2,000 Uber employees along with Gurley and Bonderman. The meeting was live-streamed. She had prepared remarks. She said the Holder investigation was “longer” and “more painful” than anticipated. In order to oversee the investigation, she said, the board created a special committee comprised of her, Bonderman and Gurley. The committee met with Holder and his team weekly and shared with Holder more than three million documents. Holder and his team conducted more than 200 interviews. She reviewed the broad categories of Holder’s recommendations, including how there will be “zero tolerance” for abusive behavior of any kind. “As I’ve said again and again, no brilliant jerks will be allowed,” she said, “and no one will be protected because they are top performers.

Huffington also spoke about the need to have more women on corporate boards, where, she said, women comprise only 19 percent of board seats across the country. She said she was happy to report that Wan Ling Martello, the former C.F.O. of Nestlé and its current head of Asia, was joining the Uber board, making it a quarter female. Huffington said that Martello was also on the board of Alibaba and then couldn’t resist telling the story of how they met at Davos, at a dinner thrown by Jack Ma, the founder of Alibaba. “[I] was immediately drawn to her,” she said.

After Huffington spoke about the need for more women board members and how one woman on a board often can lead to having more women on a board of directors, Bonderman, sitting next to her on stage, blurted out “Actually, what it shows is that it’s much more likely to be more talking.” Yikes. All hell broke loose. There were audible gasps from the audience. The timing of Bonderman’s sexist remark could not have been worse, coming at the precise moment when Uber was trying to turn the page on years of bad behavior. There was real-time outrage from the employees in the room, many of whom approached Huffington as the meeting was ending and sent her texts and e-mails about the inappropriateness of Bonderman’s comments. He quickly apologized. But it was not enough. He then resigned from the board, effective the next morning. “I appreciate David doing the right thing for Uber at this time of critical cultural changes at the company,” Huffington said in a statement.

By that point, though, another far more significant personnel change was in the offing. On June 20, as The New York Times reported, a team of Uber shareholders, including Benchmark, tracked Kalanick down in Chicago and urged him to resign. According to the Times, Kalanick called Huffington. The board member, who had once said that Kalanick should never resign, suddenly changed her tune. She said he should consider resigning. And then he did.

In the last few weeks, people have started to wonder what might be next for Huffington at Uber. She tried to tamp down speculation that she might have an ongoing role at Uber, even on an interim basis. “Thrive Global is always my top priority,” she said on June 9. “. . . My involvement [at Uber] will decrease to being a board member providing oversight and supporting the changes the leadership team has in place to write the next chapter in Uber’s history.” Soon after Kalanick resigned, however, articles have wondered whether Huffington would be Uber’s next C.E.O.

Uber’s C.E.O. search has become a parlor game throughout Wall Street and the Valley, and Huffington has said that she is not interested in putting herself in contention for the role. (According to an Uber spokesperson, Huffington is interviewing C.E.O. candidates.) But you can never count Huffington out. We are indeed living in an odd moment in time where up is down and down is up in a lot of places, particularly in places like Washington and in Silicon Valley. Maybe this is a moment perfectly designed for Arianna Huffington, a blustery confection who can use her unequaled Rolodex and penchant for mellifluous commentary, to calm the roiling waters at Uber. But despite the positioning and the rumors, Huffington is spectacularly unqualified to lead Uber, even if it were on an interim basis. During her years running the Huffington Post, the company made money in only one year—the year she decided to gussy it up for sale. Both before and after, as I’ve reported, the business made substantial losses. Still, she was able to pull off the unlikely $330 million A.O.L. sale. Thrive is less than a year old, and while as a private company is not obliged to share its profitability publicly, it is unlikely to be profitable at the moment. One thing that Huffington has been able to do is to get a group of high powered investors to back her both times. With the Huffington Post, her investors hit pay dirt; with Thrive, again it’s too early to say what will happen.

In any event, the calculus at Uber is completely different. The company is much, much bigger than either, with thousands of employees and sprawling operations around the globe. The financial stakes are much higher, too. How long Uber’s valuation stays at $70 billion remains to be seen. It may already have taken a hit or two amidst the ongoing controversy. That’s not the kind of news that the likes of TPG and Benchmark are going to be happy about. Unlike Huffington, who has little, if anything, at stake financially in Uber’s success, these big and powerful investors want the company’s valuation to pick up steam, not stall out. That’s ultimately the reason Huffington’s schtick likely won’t appeal to them, as important as her equality crusade may be. In the end, they’ll want a C.E.O. who has a proven ability to manage a complex company and make money. Huffington misses the mark on both counts.

Clarification: This story has been updated to note that Huffington has said she is not in the running for the Uber C.E.O. job.

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Scorned as the “worst C.E.O. of 2012” by CNBC’s Herb Greenberg, Andrew Mason was at the helm of Groupon when the company went public, an I.P.O. Greenberg wrote off as the “most over-hyped . . . of recent years.” Years after going public, Groupon still has trouble turning a profit.

Photo: Photo-Illustration by Ben Park; From Bloomberg (Mason), Robert Kirk/Photodisc (Ticket), both from Getty Images.

Elizabeth Holmes, Theranos

Elizabeth Holmes became emblematic of Silicon Valley excess when her $9 billion blood-testing start-up, Theranos, became the subject of a series of Wall Street Journal investigations that reported that the company’s technology didn’t actually work. Theranos is currently under federal criminal investigation.

Parker Conrad, Zenefits

Zenefits C.E.O. and co-founder Parker Conrad resigned in 2016 amid concerns over questions about his $4.5 billion start-up’s regulatory compliance. Further reports insinuated Zenefits’ company culture under Conrad was more frat house than hackathon, complete with allegations of sex in the stairwells and plenty of drinking.

Marissa Mayer, Yahoo

Hailed as the turnaround boss Yahoo so desperately needed when she was hired for the job in 2012, Marissa Mayer has come under fire as investors have lost their patience waiting for a miracle that never came. (The millions she reportedly spent on lavish parties and perks, while the ailing Internet giant circled the drain, didn’t help.) Yahoo is now up for sale.

Carly Fiorina, H.P.

When Carly Fiorina was let go from her six-year tenure as C.E.O. of Hewlett-Packard, the company’s stock jumped 10 percent upon the news of her firing. While she was C.E.O., Fiorina didn’t increase the company’s profits, and she actually decreased H.P.’s shareholders’ wealth by 52 percent. A disastrous merger with Compaq, which led her to fire some 30,000 employees, haunted Fiorina throughout her failed senate and presidential campaigns, too.

Jason Goldberg, Fab

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Gurbaksh Chahal, RadiumOne and Gravity4

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Andrew Mason, Groupon

Scorned as the “worst C.E.O. of 2012” by CNBC’s Herb Greenberg, Andrew Mason was at the helm of Groupon when the company went public, an I.P.O. Greenberg wrote off as the “most over-hyped . . . of recent years.” Years after going public, Groupon still has trouble turning a profit.

Photo-Illustration by Ben Park; From Bloomberg (Mason), Robert Kirk/Photodisc (Ticket), both from Getty Images.

Elizabeth Holmes, Theranos

Elizabeth Holmes became emblematic of Silicon Valley excess when her $9 billion blood-testing start-up, Theranos, became the subject of a series of Wall Street Journal investigations that reported that the company’s technology didn’t actually work. Theranos is currently under federal criminal investigation.

Parker Conrad, Zenefits

Zenefits C.E.O. and co-founder Parker Conrad resigned in 2016 amid concerns over questions about his $4.5 billion start-up’s regulatory compliance. Further reports insinuated Zenefits’ company culture under Conrad was more frat house than hackathon, complete with allegations of sex in the stairwells and plenty of drinking.

Marissa Mayer, Yahoo

Hailed as the turnaround boss Yahoo so desperately needed when she was hired for the job in 2012, Marissa Mayer has come under fire as investors have lost their patience waiting for a miracle that never came. (The millions she reportedly spent on lavish parties and perks, while the ailing Internet giant circled the drain, didn’t help.) Yahoo is now up for sale.

David Byttow, Secret

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Michelle Peluso, Gilt

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Photo-Illustration by Ben Park; From Bloomberg/Getty Images (Wagner).

Adora Cheung, Homejoy

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Ben Kaufman, Quirky

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Scott Thompson, Yahoo

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Photo-Illustration by Ben Park; By Jo Foord (Kindersley), from Bloomberg (Thompson), both from Getty Images.

Carly Fiorina, H.P.

When Carly Fiorina was let go from her six-year tenure as C.E.O. of Hewlett-Packard, the company’s stock jumped 10 percent upon the news of her firing. While she was C.E.O., Fiorina didn’t increase the company’s profits, and she actually decreased H.P.’s shareholders’ wealth by 52 percent. A disastrous merger with Compaq, which led her to fire some 30,000 employees, haunted Fiorina throughout her failed senate and presidential campaigns, too.

Jason Goldberg, Fab

E-commerce start-up Fab was once valued at $900 million, a near unicorn in Silicon Valley terms. But after allegedly burning through $200 million of its $336 million in venture capital, C.E.O. Jason Goldberg was forced to shutter its European arm and lay off two-thirds of its staff.

Gurbaksh Chahal, RadiumOne and Gravity4

Fired in 2014 from his ad-tech firm RadiumOne following a domestic-violence conviction, Gurbaksh Chahal founded a new company to compete with the one he was kicked out of. But Gravity4, his new firm, was sued for gender discrimination in 2015, though that case is still pending, and former employees have contemplated legal action against him.